FS KKR Capital (FSK) Q2 2024 earnings summary

Executive summary

• Net investment income for Q2 2024 was $215 million ($0.77 per share), with adjusted net investment income at $0.75 per share, both up sequentially and exceeding public guidance.

• Net asset value per share declined to $23.95 from $24.32, reflecting portfolio depreciation and distributions.

• Origination activity increased, with $1.3 billion in new investments during Q2 and $2.7 billion in the first half of 2024.

• Portfolio remains diversified across 208 companies in 24 industries, with top 10 holdings at 20% of fair value.

• Board declared a Q3 2024 distribution of $0.70 per share, including a $0.06 supplemental component, supporting a projected $2.90 per share total distribution for 2024.

Financial highlights

• Total investment income for Q2 2024 was $439 million, with net expenses of $224 million.

• Interest income was $353 million, up $3 million quarter-over-quarter; dividend and fee income totaled $86 million.

• Net realized and unrealized losses per share were ($0.39), leading to a net increase in net assets from operations of $0.37 per share.

• Distributions declared per share were $0.70, with a special distribution of $0.05.

• Dividend yield on NAV was 12.1%; yield on market value was 14.9% as of August 2, 2024.

Outlook and guidance

• Q3 2024 GAAP net investment income expected to be ~$0.72 per share; adjusted net investment income ~$0.70 per share.

• Management expects at least $2.90 per share in total 2024 distributions.

• Recurring interest income projected at $351 million, with recurring JV dividend income at $47 million.

• Future distributions are subject to board discretion and legal restrictions.

• Management continues to focus on defensive investment strategies and rigorous portfolio monitoring.